COA uncovers mess in Transco records

The Commission on Audit uncovered discrepancies in the audit reports of the National Transmission Corporation-Visayas, which has unverifiable entries in its equity contribution account amounting to P18.902 billion by the end of 2004.

State auditors revealed that after the National Power Corporation closed its books on Dec. 31, 2004, Transco-Visayas, being a functional group of NPC, still indicated a debit balance of P2.2 billion.

On the other hand, the combined balance of five power plants in the Visayas totaling to P16.7 billion was adjusted in the same year but the corresponding journal vouchers and supporting documents could not be verified. Small Power Utilities Group-Visayas has the highest balance with P8.5 billion, followed by Leyte Geothermal Plant, which has a balance of P4.4 billion, and Panay Diesel Power Plant with P2.6 billion.

The equity contribution account is used to record the capital share of a particular functional group as offshoot of its unbundling process, which took effect in 2000. These recorded capital contributions represent the net assets assigned to these respective functional groups, which form part of the parcel of the NPC. The unbundling of the accounts of these functional groups is intended to facilitate their privatization.

SPUG is a functional unit that will remain under state jurisdiction through the Power Sector Assets and Liabilities. NPC-SPUG is responsible for providing power generation in areas that are not connected to the transmission system.

COA said the subsidiary records were not maintained by the NPC/TRANSCO plants/substations, making it difficult for state auditors to verify the propriety of the entries made and doubt the validity of the account balance.

It furthers stated that the assets, which form part of the equity contributions of the functional groups, are difficult to determine as to whether these are indeed assigned to or in the actual possession of the particular plant/substation, still existing and in use for operations and recorded at their fair values.

"Further, contracts, agreements entered into by these plants/substations relative to the recorded liabilities were not presented, thus, there was no available means to verify their pertinent details," the COA report said.

State auditors said that while the consolidated trial balance of the NPC head office as of Dec. 31, 2004 indicated an P8.5 billion for the SPUG-Visayas, the latter's trial balance did not indicate any equity in the head office.

COA also learned that the Leyte Geothermal Power Plant finance division made adjustments on its equity contribution totaling to P88.37 million, but it was not able to verify that the adjustments were not reversed by the NPC-Manila.

With this, the state auditors recommend that the management, through the Unbundling Task Force, should exert effort to facilitate completion of the unbundling accounts and adjustment of the accounts should be supported by appropriate documents.

"The power plants had been instructed to organize the supporting documents of journal vouchers for presentation to auditors. The debit balances will be analyzed and necessary adjusting entries will be made, copy furnished the COA auditors," COA said. - Wenna A. Berondo